FEUERSTEIN RANCH Offering Memorandum

4979 La Panza Road, Creston, CA

February 2014

Sale of a Cabernet Sauvingon Vineyard 309 Acres: 97 Acre Vineyard – 60 Acre Alfalfa

Prepared By:

Pacifica Commercial Realty – Wine Properties Division

504 First Street, Suite A Paso Robles, CA 93446

(805)237-4040 Fax (805)237-4041

i

EXECUTIVE SUMMARY

Pacifica Commercial Realty is pleased to exclusively represent Feuerstein Ranch and Vineyard for sale with its high production Cabernet Sauvignon vineyards and alfalfa farm. The property is located at 4797 La Panza Road, Creston, CA, in the heart of the Paso Robles AVA.

The entire Property is comprised of 313 acres divided into 3 legal parcels. It has been planted with 66.09 acres of Cabernet Sauvignon, with an additional 27 acres being planted in the spring of 2014. Another 74.01 acres of the property is farmed with alfalfa. All of the crops are currently irrigated; or in the case of the vineyard being planted this spring, have established water rights to be irrigated.

There are three existing wells on the Property with a combined production of 950 gallons per minute. A fourth well is permitted and will be drilled in March 2014.

The Property is located on the Paso Robles aquifer and is subject to the current moratorium which restricts new vineyard plantings unless the Owner can demonstrate a reduction in water usage equal to the water requirement for the new plantings. Accordingly, by terminating the alfalfa operation, we believe the Buyer would reduce water consumption by more than the amount required to allow the planting of the entire Parcel to wine grapes.

The Owner has initiated a lot line adjustment process that will reconfigure the parcels to;

Parcel 1, 149.62 acres with 66.09 acres of irrigated Cabernet Sauvignon vineyard, 49.52 acres of irrigated alfalfa, and a well producing 450 gallons per minute.

Parcel 2, 82.45 acres with 1 acre of mixed varietal wine grapes, 11.51 acres of irrigated alfalfa, 2 homes, ranch buildings, pond, and 2 wells producing 500 gallons per minute.

Parcel 3, 80.93 acres with 27 acres of Cabernet Sauvignon vineyard planted in 2014, 12.98 acres of irrigated alfalfa, and a permitted well which will be drilled in March 2014.

There are no contracts in place for the sale of the 2014 grape crop.

The Owner is currently offering 2 separate parcels for sale;

Parcel 1, $5,750,000

Parcel 3 $1,975,000

Entire Ranch $9,500,000

ii

TABLE OF CONTENTS

LOCATION………………………………………………………………………………………………………………………… 1

LOCATION MAP……………………………………………………………………………………………………………….. 1

AERIAL PHOTO..……………………………………………………………………………………………………………….. 3

PHOTOGRAPHS…………………………………………………………………………………………………………………. 4

SOILS MAP……………………………………………………………………………………………………………………….. 8

TOPOGRAPHIC SURVEY…………………………………………………………………………………………………….. 9

PROPERTY DESCRIPTION…………………………………………………………………………………………………. 10

WILLIAMSON ACT STATUS………………………………………………………………………………………………. 13

DISCLAIMER AND CONFIDENTIALITY NOTICE………………………………………………………………….. 14

CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT…………………………………………………. 15

1

LOCATION

The Property is located at 4797 La Panza Road, Creston 0.75 miles southeast of the intersection of California Highway 41 and Creston Road, 0.5 miles northeast of the village of Creston. The Property is near the geographic center of the Paso Robles American Viticultural Area, surrounded by other premium producing vineyards.

The Property is uniquely located to provide excellent conditions for wine grape production, featuring;

• High Production History, 6.6 to 8.2 Tons per acre • $1,300 per Ton 2013 sale price • Nighttime cooling impact of the Templeton Gap • Rolling hills giving natural frost protection

LOCATION MAP

3

AERIAL PHOTO

4

PHOTOGRAPHS

5

6

7

8

SOILS MAP

9

TOPOGRAPHIC SURVEY

10

PROPERTY DESCRIPTION

The property is a working ranch, improved with perimeter fencing, internal roads, farm buildings, pond, wells, water distribution and irrigation system and two houses. It contains 313 acres subdivided into three legal parcels. 93.09 acres of land has been planted with Cabernet Sauvignon grapes and another 74.01 acres is planted with alfalfa.

The Property has 4,600 linear feet of frontage on the south side of La Panza road. Along the road frontage is approximately 51.87 acres of level Class 1 farmland planted with irrigated alfalfa.

The remainder of the Property has rolling hills with a forty foot elevation change from the lowest to the highest elevation. The soil designations are “Arbuckle – Positas Complex” for approximately 70% of the land area and “Elder Loam” for the remaining 30% of land. There are oak trees scattered across the Property.

There is electrical service on the Property with 5 meters. Television and Internet services are accessed via satellite providers. There are three on-lot septic systems installed for the two houses and ranch buildings. Telephone service is available on the Property. There is no natural gas service on the Property.

Vineyards

Block A 39.78 Acres of Cabernet Sauvignon grapes;

• 5C rootstock planted in 1998, grafted to Cabernet Sauvjgnon clones 7 & 8 in 1999 • 3” end posts, 6’ T Posts, 5 vertical wire trellis, 6X10 spacing • Recent production has been;

o 2011 265 Tons $1,200/T $318,000 6.6 T/Ac o 2012 333 Tons $1,250/T $416,250 8.3 T/Ac o 2013 293 Tons $1,300/T $380,900 7.3 T/Ac o All grapes were sold to French Camp Vineyards

Block B 26.31 Acres of Cabernet Sauvignon grapes planted in 2013

• Cabernet Sauvignon clone 07 FG/101-14 rootstock • 2 7/8” End Posts, 6’ T posts w/ (2) intervening 6’ rebar, 5 wire trellis, 6X10 spacing

Block C 27 Acres of Cabernet Sauvignon grape vines at Sunridge Nursery to be planted in April 2014. The land has been ripped, main lines installed in preparation to receive the planting.

• Cabernet Sauvignon clone 08 FG/101-14 rootstock 2 7/8” End Posts, 6’ T posts w/ (2) intervening 6’ rebar, 5 vertical wire trellis, 6X10 spacing

Block D Premium 1 Acre of wine grapes planted in 2002, with mixed varietals for field blend, unknown clones and rootstock.

• 3” end posts, 6’ T Posts, 5 wire trellis, 8X10 spacing

11

Alfalfa

51.87 Acres planted and irrigated along the La Panza Road frontage, 2013 crop, estimated production with both sales to outside clients as well as for Owner’s use at his horse breeding facility in Buttonwillow.

• 7 Cuttings • 9.5 tons per acre • $240 per ton • $136,800

22.14 Acres southwest corner first cutting April 2014.

Water

Wells

The ranch has 4 producing wells;

1. Parcel 3, 8” casing, produces 450 gallons per minute 2. Parcel 2, 8” casing, produces 300 gallons per minute 3. Parcel 2, 8” casing, produces 200 gallons per minute 4. Parcel 1, 10” casing, permitted to be drilled in March 2014.

The wells are connected with water mains as depicted on the following diagram:

Pond & Storage

There is a farm pond on parcel 2 that has a surface area of approximately 3 acres. It is not used as an irrigation system reservoir.

There are 2 water storage tanks on parcel 2 that support the farm buildings and two homes. One has a capacity of 3,000 gallons, the other has a capacity of 1,000 gallons.

Paso Robles Groundwater Aquifer Emergency Ordinance

The County of San Luis Obispo has recognized that the Paso Robles aquifer is being over draughted, i.e. more water is being pumped out annually than is being replenished by natural sources. In response the Board of Supervisors adopted an “Urgency Ordinance” that limits new development and planting of irrigated crops for 2 years, while a permanent ground water ordinance is enacted. Details about the water moratorium can be reviewed on line at; http://pasowinerealestate.com/frequently-asked-questions-concerning-paso-robles- groundwater-basin-ordinance-2/

The restrictions in the Urgency Ordinance pertaining to the planting new irrigated crops will allow the property owner to plant four acres of new irrigated wine grape vineyards for every acre of irrigated alfalfa that is removed from production. Accordingly the Property could be completely planted with wine grapes and satisfy the requirements of the ordinance with no off site mitigations.

12

Lot Line Adjustment

The Property is currently subdivided into three parcels, one of which does not have frontage on La Panza Road. The Owner has initiated a “Lot Line Adjustment” process that will relocate the property lines, creating three independent parcels, all with road frontage, well with ample production, complete vineyard blocks and alfalfa fields.

The Owner is offering the parcels for sale as they will be defined when the Lot Line Adjustment is complete. The Owner is willing to close transaction(s) based on the current lot lines with an agreement that Buyers will honor the proposed Lot Line Adjustment, and will agree to record new deeds recognizing those lot lines when the process is completed

The following describes the new parcels and improvements

Parcel 1 West Parcel +/- 146.63 Acres improved with;

• Vineyard Block A • Vineyard Block B • 49.52 acres of irrigated alfalfa • Well 450 • Electric Meter • External perimeter fencing • Internal Roads

Parcel 2 Ranch Headquarters Parcel +/- 90.18 Acres improved with;

• Vineyard Block D • 11.51 acres of irrigated alfalfa • Well 300 & 200 gallons per minute • Electric Meter • External Perimeter Fencing • Internal Roads • 3 Acre pond • Main House 2,700 square feet, 5 Bedroom, 3 bath, in the process of remodel;

Requires restoration, floor coverings, some drywall work, kitchen installation, and reasonable upgrades

2 car garage with shop and carport Entry patio

13

• Modular House 1,260 square feet, 2 bedroom 1 bath

Deck and carport • Ranch Headquarters

1,800 square foot barn 2 garages 3 sheds 4 grain storage bins, to be removed water tanks, 3,000 gallons & 1,000 gallons 2 mobile homes

Not offered for sale as a separate Parcel

Parcel 3 East Parcel +/- 72.56 Acres improved with;

• Vineyard Block C • 12.98 acres of irrigated alfalfa • Well 450 gallons per minute • Electric Meter • External perimeter fencing • Internal Roads

Williamson Act Status

The property is subject to Williamson Act contracts. The contracts will be modified as part of the lot line adjustment process.

14

DISCLAIMER AND CONFIDENTIALITY NOTICE

The purpose of the Offering Memorandum is to acquaint a prospective Buyer with preliminary information concerning the assets and operations of Feuerstein Ranch and Vineyard. Pacifica Commercial Realty, its employees, agents, brokers, financial analysts, and affiliate advisors, have made no investigation or verification of the information herein.

This document if the Property of Pacifica Commercial Realty and represents information about Feuerstein Ranch and Vineyard. This document is not to be copied or distributed, nor its contents divulged in any way, as it may contain highly confidential information that are considered trade secrets by the Seller. Prior to the receipt of this Offering Memorandum, or any of the information contained in it, you are required to sign a Confidentiality and Non-Disclosure Agreement.

Information contained herein has been obtained from the owner of the property or from other sources deemed reliable. We have no reason to doubt its accuracy, but we do not guarantee it.

15